Anger on the streets of Cyprus after bail-out deal

Locals express unhappiness with the way the European Union has handled Cyprus'
financial crisis, while uncertainty remains over when banks will resume
normal service, according to The Telegraph's Nick Squires in Nicosia.

10:59AM GMT 25 Mar 2013

Many islanders are angry with European Union's handling of Cyprus' banking crisis and the continuing limit on withdrawals, says The Telegraph's Nick Squires, speaking from the Nicosia.

"There's anger, there's great fear and trepidation for the future.

"At the moment no-one is quite sure when banks will re-open and that uncertainty is fuelling this very difficult atmosphere for Cypriots of apprehension for the future.

"An economist said to me, 'this is a classic case study of a problem being turned into a drama, and a drama being turned into a crisis, needlessly; it should not have escalated so quickly.'"

Cypriot President Nicos Anastasiades and heads of the European Union, the European Central Bank and the International Monetary Fund sealed the deal in the early hours of Monday and it was swiftly endorsed by eurozone finance ministers.

Popular Bank of Cyprus, also known as Laiki and the nation's second largest bank, will be shut as part of the deal, with the raid on uninsured Laiki depositors expected to raise €4.2bn.

The Bank of Cyprus, the island's largest lender, survives but investors not protected by the €100,000 deposit quarantee will suffer a major "haircut" – a forced loss on the value of their investment - over the coming weeks of up to 40pc.

Deposits above €100,000 in both banks, which are not guaranteed under EU law, will be frozen and used to resolve Laiki's debts and recapitalise Bank of Cyprus. The Bank of Cyprus must also assume over €9 bn in liabilities owed to the ECB by Laiki.